Analysis: Edelman Closes In On Agency Restructuring And $1bn Target
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Analysis: Edelman Closes In On Agency Restructuring And $1bn Target

A broad restructuring of agency roles is nearing completion at Edelman, as the firm closes in on becoming the first $1bn PR firm.

Arun Sudhaman

Analysis: Edelman Closes In On Agency Restructuring And $1bn Target

A broad restructuring of agency roles is nearing completion at Edelman, as the independent agency gears up to become the first $1bn PR firm.

The reorganisation, which has remained an internal initiative — initially dubbed 'Edelution' — has been underway for more than a year, following similar efforts at other agencies, most notably Golin, to build more specialist capabilities in response to the integration of earned and paid media.

Edelman's talent is being grouped into four main areas. Intelligence focuses on insights and includes user experience, planning and analytics talent. Creative/content houses the firm's creative and editorial talent, and is responsible for ideas. Business management translates to the more account-focused functions, features client, geographic and practice/sector leadership. Activation/specialty, meanwhile, is charged with building campaigns across various channels, and features programming, experiential, earned, paid and social media.

The process is being overseen by Edelman APACMEA president David Brain and US chief operating officer Juliana Richter. As Brain told the Holmes Report, the traditional PR structure, which typically sees one executive handling several functions "could never deliver that great work — it encouraged everybody to do everybody's job."

"PR agencies have been very good at knowing how to make money and provide a good service, using [the traditional] structure," said Brain. "It was efficient and inefficient. Clients got this fantastic service. Then all this new stuff happened — that puts a huge strain on the client relationship.

By "new stuff", Brain is referring to the emergence of social media, which has changed outputs from "meetings, correspondence and press work" to a more content-driven approach. "Obviously, social platforms require special skills — search, being able to write code, etc.." he says. "It's become exponential, particularly when you look at the planning and creativity beyond that."

In addition, said Brain, the traditional client relationship manager (CRM) — housed under Edelman's business management function, has become more of a specialist role, rather than someone who can do everything moderately well.

So far, more than two-thirds of Edelman's 65 offices worldwide have embarked on the restructuring, with the remainder committed to implement the new model by the end of the firm's 2016 fiscal year in June. Offices that are growing fast — such as in Asia and specific US markets — have found the shift less difficult, said Brain. "It’s easier to bring people on with new skillsets rather than re-tool or retrain existing teams."

In offices where a lack of scale makes the process unfeasible, added Brain, Edelman has opted to develop regional centres of excellence for specific functions. "A lot of our clients in developing markets still want a big chunk of the old way of working," he added. "This is a migration — every office is having to tool up with more specialist capability. And every office needs a conscious plan."

Added flexibility comes from giving people in smaller offices what Brain describes as a "1+1" option. "What’s your main thing and what’s the other thing you want to do in the future? We’ve spent a lot of time working out the pathways are for each role. Eg, if you’re a community manager, you’ve probably got a pretty good idea of how to become a planner."

Change management

With several PR firms, big and small, undertaking similar efforts to revamp their agency models, change management has emerged as a critical challenge. Brain said that Edelman's process is backed by a comprehensive training programme mapped against a grid of job roles that features as many as nine levels of seniority for each function.

"In a firm of our size, this is where the rubber has had to hit the road, as it were," said Brain. "You can talk about change but unless people have the basics it won't happen."
"Nobody will be unaware of what this is, or why we’re doing it. Everyone is being audited against the plan." Despite the level of change, Brain says that staff attrition has not been unexpected. "All we did was put structure, policy and training materials around what was already happening. If you were a client relationship person doing media, you could still do that. But if you are a client relationship manager, you have to recognise the role and power of other skills. It’s kind of happened organically — I don’t think anyone has left because of this evolution."

Unsurprisingly, Brain downplays the notion of internal resistance to the changes, noting that readiness is a bigger challenge.

"It's not a challenge in terms of people intellectually accepting it," he says. "What we’ve sometimes found is that people’s ability to change — not their desire — is sometimes less than others. We got everybody to commit 11 months ago, to how much of this they would do for their business unit, and what the shape of it would be."

The restructuring comes as Edelman's fourth acquisition in 18 months, this time of German firm Ergo, propels it closer to becoming the first PR firm to break the mythical $1bn barrier. Edelman reported 2015 fiscal year revenue of $833m — only Weber Shandwick, among its primary rivals, has matched its size and growth in recent years.

The reorganisation is part of Edelman's overall effort to compete with holding groups such as WPP, which has aggressively courted marketing communications business by deploying 'horizontal' cross-agency teams. Richard Edelman believes that his firm can compete with this trend by starting with public relations first, calling the approach 'communication marketing.'

"This brings the science of marketing into the topicality of communications," said Brain. "You cannot deliver on (communication marketing) unless you have the process that we have just been through — this has underpinned it."

Specialist generalists

The biggest challenge, says Brain, has been developing a new generation of client relationship managers who can serve as effective orchestrators. "We thought getting all of the new specialist skills onboard was going to be the hard thing," he explains. "Actually the hardest thing was the CRM — the thing we didn’t recognise at the beginning was how hard it was for someone to move from generalist to multi-specialist. It’s very difficult to get hold of those type of those people."

As for traditional clients that still want traditional services, Brain is wary of "throwing the baby out with the bathwater". But he believes that content syndication and search are already stretching those definitions. And the "big new horizon", as he puts it, will be "professionalising media planning and buying."

Edelman's size also complicated matters, requiring, for example, a change in job titling and descriptions for 5,500 people. "A big organisation has a lot to change," says Brain. But the firm's sheer scale has also meant that it can provide specialist skills more readily than, for example, a 20-person agency. "You have to have 120 people in each office, you need to get over a certain scale to develop these specialisms on a market by market basis."

That size, along with a well-founded reputation for 'organized chaos', also meant that the process was hardly an easy one. " It's probably the biggest lift we’ve had as a company — it's hard work," admits Brain. "And you can’t devolve it. Probably the hardest managerial process [our people have] been through in their time here."

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